| Bothra Shipping Services Private Limited | ||||||
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| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings ratings on the bank facilities of Bothra Shipping Services Pvt Ltd (Bothra) continue to reflect the Bothra group's strong market position in the shipping services business and the moderate financial risk profile. These strengths are partially offset by susceptibility to increasing competition and economic cyclicality. |
Analytical Approach For arriving at its ratings, CRISIL Ratings has combined the business and financial risk profiles of Bothra, Sarat Chatterjee & Co (VSP) Pvt Ltd (Sarat) and Haldia Floating Terminal Pvt Ltd (Haldia). This is because the three companies, together referred to as the Bothra group, have common promoters, operate in a similar line of business and have significant operational linkages and fungible cash flow.
Please refer Annexure - List of entities consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths: * Strong market position The Bothra group’s business risk profile is supported by its strong market position in port operations, the promoters’ extensive experience and a reputed and diversified clientele. Also, the group has diversified presence in the east coast, with operations at major ports, such as Haldia, Paradeep, Kakinada and Visakhapatnam. The group will maintain its healthy market position, backed by its longstanding track record and strong operational capabilities.
* Moderate financial risk profile Adjusted networth is estimated at a healthy at Rs 297 crore as on March 31, 2021. Debt protection metrics are expected to be above average, indicated by interest coverage and net cash accrual to total debt ratios of 3.4 times and 0.26 time respectively in fiscal 2021. However, because of large, debt-funded capital expenditure (capex) incurred in the previous years, gearing is estimated at a moderate 1.36 times as on March 31, 2021.
The group had invested about Rs 65 crore in a special purpose vehicle (SPV), Kalinga International Coal Terminal Paradip Pvt Ltd (Kalinga), for the development of a new coal terminal at the Paradip port. The SPV is sponsored along with Kakinada Seaports Ltd and Ripley & Co. Bothra group has also extended corporate guarantees to various entities including Kalinga. The extent of financial support extended by the Bothra group, progress of Kalinga project and the performance of the entities where it extended its guarantee could have a bearing on the Bothra group's financial risk profile over the medium term which will be a key monitorable.
Weaknesses: * Susceptibility to intense competition As a moderate-sized player in the shipping-related services business, the group remains highly dependent on coal and fertiliser cargoes. Also, Bothra continues to face intense competition from strong players in neighbouring ports.
* Susceptibility to economic cyclicality The port operations business is susceptible to economic cyclicality. Any uncertainty in the economy, such as decrease in cargo handling, can substantially impact profitability. For instance, traffic at Bothra's coal terminal declined substantially in fiscals 2017 and 2018, mainly on account of fall in demand for imported thermal coal. |
Liquidity: Adequate Net cash accrual, expected at Rs 105-130 crore in fiscals 2021 and 2022, will adequately cover yearly debt obligation of Rs 87-100 crore. Bank limit utilisation averaged 82% over the 12 months through December 2020. Expected disbursement of guaranteed emergency credit line of Rs 75 crore by March 2021 is likely to support liquidity over the medium term. Furthermore, the group has moderate financial flexibility and can raise additional debt or refinance or avail of top-up loans, if required. However, liquidity will be partially constrained by the large debt obligation and sizeable funding support extended to affiliate entities. The group had availed of moratorium on some of its bank loan facilities under the Reserve Bank of India's Covid-19 Regulatory Package. |
Outlook Negative The Bothra group’s business risk profile and liquidity are likely to remain under pressure over the medium term on account of Covid-19 pandemic and slowdown in the economy. |
Rating Sensitivity factors Upward factors
Downward factors
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About the Group The Bothra group was formed in 1976 with the setting up of Bothra Shipping by Mr RC Bothra and his family members. The promoters acquired Sarat in 1978. The group is engaged in stevedoring, clearing and forwarding and allied services. It operates in several ports, including Kakinada, Visakhapatnam and Krishnapatnam, all in Andhra Pradesh; Mangaluru in Karnataka; Goa; Haldia in West Bengal; and Paradip in Odisha. It is the exclusive operator at Kakinada for handling coal and fertiliser traffic.
Kalinga is an SPV promoted by Kakinada Seaports Ltd, Bothra Shipping Services Pvt Ltd and Ripley & Co, formed for the development of a new coal import terminal at the Paradip port on a build-operate-transfer basis.
Haldia is an SPV in which Bothra Shipping Services Pvt Ltd holds 51% and the Ripley group holds 49%. Operations started from April 2018, and the company has a contract for 15 years. The terminal has a capacity of 4 million metric tonne per annum. |
Key Financial Indicators: (consolidated)*
*CRISIL Ratings-adjusted numbers |
Any other information: Not applicable |
| Note on complexity levels of the rated instrument: CRISIL complexity levels are assigned to various types of financial instruments. The CRISIL complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments. |
Annexure - Details of Instrument(s)
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Annexure – List of entities consolidated
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of various bank facilities | ||||||||||||||||||||||||||||||||||||||||||||||||
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